1. This appeal under Section 100 of the Code of Civil Procedure is at the instance of the original plaintiffs against the judgment and decree dated 30.9.1993 passed by learned Second Joint District Judge, Nadiad in Civil Regular Appeal No.9 of 1988, whereby the learned Appellate Judge dismissed the appeal and confirmed the judgment and decree passed by the learned Trial Judge dated 27.11.1987 whereunder the learned Trial Judge dismissed the suit of the appellants for redemption of mortgage of the suit property bearing Survey No.148, admeasuring 3 acre 29 gunthas situated in revenue limits of Rustampura, Taluka Thasra, District Kheda.
2. As could be found from the record of the case, appellants deceased Shaikh Rahemanbhai Mohamadbhai and Shaikh Ismailbhai Mohamadbhai original plaintiffs had executed a document dated 30.12.1960 in favour of respondent No.1 and 2 titling the same as conditional sale for Rs.10,000/- providing therein that if the said amount was repaid within five years, they shall give back the suit property with possession to appellants, however, the appellants shall have no right to get back the suit property after expiry of the above said period.
3. It was the case of the appellants in their suit that since it was mortgage by conditional sale, the suit property remained with respondent No.1 and 2 as mortgaged property and they had right to redeem mortgage from respondent No.1 and 2 on payment of amount to them.
4. The learned trial Judge came to the conclusion that the transaction was not mortgage with conditional sale but it was sale with a condition to repurchase the property if the amount of Rs.10,000.00 was repaid within five years by the appellants. The learned Judge also found that the respondent No.1 and 2 became absolute owner of the suit property by virtue of the subsequent document executed by the appellants on 30.10.1961 whereby the appellants had relinquished their right to get back the suit property since the respondent No.1 and 2 had agreed not to take back the amount of Rs.1,500.00 subsequently paid to the appellants.
5. The appellants unsuccessfully carried the matter further by filing Civil Regular Appeal No. 9 of 1988 in the Court of the learned 2nd Jt. District Judge Kheda at Nadiad.
6. The learned appellate Judge came to the conclusion that the document executed by the appellants on 30.12.1960 at Exh. 23 could not be said to be a deed of mortgage as not only the contents of the said documents were reflecting the intention of the parties to treat the transaction as sale but subsequent writing at Exh. 37 was also a step taken by the appellants to make it clear that the real intention of the parties was to treat the transaction as sale with condition to repurchase and not mortgage.
7. This appeal was admitted on the following substantial question of law:
(1)Whether on the facts and circumstances of the case, the Courts below had erred in interpreting the documents in question being Exh.37 for ascertaining the nature of transaction?
8. This Court finds that in fact, core issue involved in this appeal is, whether the deed at Exh.
23 is mortgage by conditional sale or is sale with condition to repurchase? It is the case of the appellants that the transaction between the parties in deed at Exh.23 is mortgage by conditional sale whereas the case of the respondents no.1 and 2 is that it is conditional sale with right given to the appellants to repurchase the suit property by making payment within five years from the date of execution of the deed Exh. 23, on the default of which, sale was to become absolute.
9. Since the parties have focused on construction of the deed Exh. 23 and since this court is also of the opinion that the main substantial question is of construction of deed Exh. 23, in order to obviate any technicality, the following further substantial question of law is framed and the same shall be the main substantial question of law.
Whether the transaction contained in the deed Exh. 23 is mortgage by conditional sale or sale with to condition to repurchase?
9.1 I have heard learned advocates for both the parties.
10. Learned Advocate Ms. Patel appearing for learned advocate Mr. AJ Patel for the appellant has submitted that both the Courts below have committed serious error in construing the deed Exh. 23 as a transaction of sale and not a mortgage by conditional sale. She submitted that though the document was branded as conditional sale but the nomenclature of the document would not make such document to be a document of sale if the contents thereof and the evidence of the parties would go to prove the same as mortgage. She submitted that the conditional sale is just a phrase used for the transaction couched in the document. She submitted that as per the panchanama, in the year 1986, value of the crop from this land itself had gone much beyond the price quoted in the document and, therefore, it cannot be believed that the land was sold for the price stated in the document and, therefore, the transaction was required to be taken as a transaction of mortgage with condition to get back the land on redemption of mortgage by making payment of the amount to respondent No.1. She further submitted that there was relationship of creditor and debtor between the parties which could be seen from the document Exh. 32 which was an order passed by the Government authority for the purpose of waiver of interest/debt of a person like appellants wherein it is mentioned that the respondent No.1 and 2 were the creditors of the appellants. She further submitted that there could not be any sale between such creditor and debtor and it could only be a transaction of mortgage and both the courts below have failed to appreciate this important aspect of the matter and if the contents of the document at Exh. 23 are read in their entirety, nowhere it is mentioned that the ownership rights were transferred but rights as regards possession only were transferred on condition of giving back the possession to the appellants on making the payment of the amount stated in the document to respondents No.1 and 2. She further stated that the fact that the further amount of Rs.1500.00 was paid by respondent no.1 and 2 as could be seen in the document at Exh.
37 shows that the price stated in the first document at Exh. 23 was never the price of consideration for sale of the property but it was just an amount lent by respondent no.1 and 2 to the appellants for which the respondent no.1 and 2 got the document of mortgage executed with condition of giving possession of the property back to the appellants. She submitted that both the courts below have committed serious error in construing this document Exh. 37 as a document releasing and/or relinquishing right of the appellants to repurchase the suit property which make the respondent no.1 an absolute owner of the property. She submitted that the phrase used in the document Exh. 23 for handing over possession of property to respondent No.1 and 2 could only be used in the document of mortgage and not in the document of sale and, therefore, both the courts below have committed serious error in construing the document as a document of sale and not a document of mortgage. She submitted that the appellants could not have intended or took the transaction to become sale on default of making payment because what was agreed was to hand over possession to the respondent no.1 and 2 under the document Exh. 23 and condition was to make payment within five years to get back the possession and the parties never intended to make the transaction of sale and, therefore, in no circumstances, the transaction contained in the document at Exh. 23 could be either taken as conditional sale or mortgage becoming sale on failure of payment of the amount. She, thus, stated that both the courts below have lost sight of the important provisions of law and have considered irrelevant material and have misconstrued the document Exh. 23 and, therefore, the judgment and decree passed by both the courts below are required to be quashed and set aside. She further submitted that the document Exh. 37 otherwise could not be read in evidence as the same was not a registered document, therefore, no finding could have been recorded by both the courts below relying on such document that the original transaction was the transaction of sale and not the mortgage.
In support of the above submissions, learned advocate for the appellants has relied on the decision in the case of Satyadev v. Mahapatra, reported in AIR 1964 Patna 193 and Rati Ram and others v. Mam Chand and others, AIR 1959 Punjab 117.
11. In reply, learned advocate Shri RR Vakil submitted that both the Courts below have not committed any error in construing the transaction between the parties as transaction of sale. He pointed out that the appellants themselves had intended the transaction contained in Exh. 23 to be conditional sale and agreed to allow such transaction of sale becoming absolute if the condition of repayment is not fulfilled within the stipulated time. He further submitted that the appellants themselves had titled the document as document of conditional sale and it was not open for the appellants to say that it was a conditional mortgage. In fact, there was no question of considering the transaction as mortgage between the parties because not only from the contents of Exh.23 any kind of relationship of creditor and debtor could be made out but even there was no other evidence whereby it was established that there was relationship of creditor and debtor between the parties. Mr. Vakil further submitted that both the courts below have on proper construction of document Exh. 23, rightly came to the conclusion that it was a transaction of sale with condition to repurchase by the appellants on payment of money taken by the appellants and the appellants having taken more amount of Rs.1500.00 for relinquishing their rights to get back the property by way of separate document at Exh. 37, it could not be said that the appellants had ever intended the transaction contained in deed Exh. 23 to be sale with condition to repurchase.
12. Mr. Vakil therefore submitted that it is not necessary that the second document was required to be registered because by the second document, no right in respect of properties was transferred but it was just voluntary action on the part of the appellants to relinquish their right to get back the land by making payment of the amount taken by them. He submitted that the second document Exh. 37 was executed within one year but even if such document was not executed and still no payment was made within five years, sale would become absolute.
13. Mr. Vakil further submitted that the deed at Exh. 23 was in fact a deed of sale with condition and not a mortgage by conditional sale because the terms of the deed clearly and unequivocally disclose the intention of the original owners- the appellants to sell the property and in fact, the language and phraseology used in the deed are purely for conferring the right, title and interest in the suit property in favour of the respondents no.1 and 2 to make the respondents absolute owner of the suit property at the end of the period of five years on default of complying with the condition of payment by the appellants. He submitted that other attendant circumstance of execution of document Exh. 37 to find out the real intention of the parties can be considered. He submitted that both the courts below have rightly construed deed Exh. 23 in the context of the provisions of section 54, 58 and 60 and have committed no error in holding that the deed at Exh.
23 is sale with condition and not mortgage with condition. He, therefore, urged not to interfere with the judgment and decree passed by both the courts below and to dismiss the present second appeal.
In support of the above submissions, learned advocate for the respondents has relied on the decision in the case of Kantilal M. Kadia versus Smoabhai Dahyabhai Kadia reported in 2003-LAWS(GJH)- 3-60= 2003-GLR-1-817,2003-GCD-3-2386.
14. The issue whether a given transaction could be termed as a mortgage by conditional sale or sale with condition to repurchase has always been a vexed question and continued to be considered by Hon'ble the Supreme Court right from 1954 onwards. Therefore, the view expressed by Hon'ble the Supreme Court in various judgments on this very issue needs to be referred first.
14.1 In the case of Chunchun Jha v. Ebadat Ali and another, reported in AIR 1954 SC 345, a Constitution Bench of the Apex Court recognized that the question whether a given transaction is a mortgage by conditional sale or a sale outright with a condition of repurchase is a vexed one which invariably gives rise to trouble and litigation. The Court held that once a transaction is embodied in one document and not two and once its terms are governed by Section 58(c), then it must be taken to be a mortgage by conditional sale, unless there are express words to indicate the contrary, or, in a case of ambiguity, the attendant circumstances necessarily lead to the opposite conclusion. The question in such case is not whether the words purport to make the transferee an absolute proprietor, for of course they must under Section 58(c), but whether that is done only ostensibly and not in substance. The Court held that in the circumstances of a given case, there may be no need to keep a reasonable margin between the debt and the value of the property as is ordinarily done in the case of a mortgage. When there was a relationship of debtor and creditor between the parties existing on the date of the suit transaction and the bulk of the consideration goes in satisfaction of such debt, it is legitimate to infer, in absence of clear indications to the contrary, that the relationship of debtor and creditor was intended to continue.
In the case of Bhaskar Waman Joshi (deceased) and others v. Shrinarayan Rambilas Agarwal (deceased) and others, reported in AIR 1960 SC 301, Hon'ble the Supreme Court has held as under in para 7:
“7. The proviso to this clause was added by Act XX of 1929. Prior to the amendment there was a conflict of decisions on the question whether the condition contained in a separate deed could be taken into account in ascertaining whether a mortgage was intended by the principal deed. The Legislature resolved this conflict by enacting that a transaction shall not be deemed to be a mortgage unless the condition referred to in the clause is embodied in the document which effects or purports to effect the sale. But it does not follow that if the condition is incorporated in the deed effecting or purporting to effect a sale a mortgage transaction must of necessity have been intended. The question whether by the incorporation of such a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The circumstance that the condition is incorporated in the sale deed must undoubtedly be taken into account, but the value to be attached thereto must vary with the degree of formality attending upon the transaction. The definition of a mortgage by conditional sale postulates the creation by the transfer of a relation of mortgagor and the mortgagee, the price being charged on the property conveyed. In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. What distinguishes the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. The form in which the deed is clothed is not decisive. The definition of a mortgage by conditional sale itself contemplates an ostensible sale of the property. As pointed out by the Judicial Committee of the Privy Council in Narasingerji Gyanagerji v. P. Parthasaradhi, 51 Ind App 305: (AIR 1924 PC 226), the circumstance that the transaction as phrased in the document is ostensibly a sale with a right of repurchase in the vendor, the appearance being laboriously maintained by the words of conveyance needlessly iterating the description of an absolute interest or the right of repurchase bearing the appearance of a right in relation to the exercise of which time was of the essence is not decisive. The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the deed viewed in the light of surrounding circumstances. If the words are plain and unambiguous they must in the light of the evidence of surrounding circumstances be given their true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may be law be permitted to be adduced to show in what manner the language of the deed was related to existing facts. Oral evidence of intention is not admissible in interpreting the covenants of the deed but evidence to explain or even to contradict the recitals as distinguished from the terms of the documents may of course be given .Evidence of the contemporaneous conduct is always admissible as a surrounding circumstance, but evidence as to subsequent conduct of the parties is inadmissible.”
14.2 In the case of Bhoju Mandal and others v. Debnath Bhagat and others, reported in AIR 1963 SC 1906, Hon'ble the Supreme Court has observed as under in para 4:
4. There is a clear legal distinction between the two concepts, a mortgage by conditional sale and a sale with a condition of repurchase. The former is a mortgage, the relationship of debtor and creditor subsists and the right to redeem remains with the debtor. The latter is an out and out sale whereby the owner transfers all his rights in the property to the purchaser reserving a personal right of repurchase. The question to which category a document belongs presents a real difficulty which can only be solved by ascertaining the intention of the parties on a consideration of the contents of a document and other relevant circumstances. Decided cases have laid down many tests to ascertain the intentions of the parties but they are only illustrative and not exhaustive.
14.3 In the case of P.I.Bapuswami v. N. Pattay Gounder, reported in AIR 1966 SC 902, Hon'ble the Supreme Court has observed as under in para 4 and 5:
4. The question of law involved in this appeal is whether the document, Ex. B-1 executed by Palani Moopan in favour of the 1st defendant is in its true effect, a mortgage by conditional sale or a sale with a condition for retransfer.
5. By S. 58 (c) of the transfer of Property Act a mortgage by conditional sale is defined as follows:
" 58. (c) Where the mortgagor ostensibly sells the mortgaged property -
On condition that on default of payment of the mortgaged - money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale:
Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale".
The proviso to this clause was added by Act 20 of 1929. Prior to the amendment there was a conflict of decisions on the question whether the condition contained in a separate deed could be taken into account in ascertaining whether a mortgage was intended by the principal deed . The Legislature resolved this conflict by enacting that a transaction shall not be deemed to be a mortgage unless the condition referred to in the clause is embodied in the document which effects or purports to effect the sale. But it does not follow that if the condition is incorporated in the deed effecting or purporting to effect a sale a mortgage transaction must of necessity have been intended. The question whether by the incorporation of such a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The definition of a mortgage by conditional sale postulates the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property conveyed. In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. The distinction between the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt, The form in which the deed is clothed is not decisive. The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the document viewed in the light of surrounding circumstances. If the language is plain and unambiguous it must in the light of the evidence of surrounding circumstances be given its true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to existing facts.”
14.4 In the case of Tamboli Ramanlal Motilal (Dead) by LRs versus Ghanchi Chimanlal Keshavlal (Dead) by LRs and another, reported in1993 Supplementary (1) SCC 295, Hon'ble the Supreme Court has observed in para 16 as under:
“16. In order to appreciate the respective contentions, it is necessary for us to analyse Ex. 26 dated 11-12-1950. Before that, it is necessary to utter a word of caution. Having regard to the nice distinctions between a mortgage by conditional sale and a sale with an option to repurchase, one should be guided by the terms of the document alone without much help from the case law. Of course, cases could be referred for the purposes of interpreting a particular clause to gather the inteniion. Then again, it is also settled law that nomenclature of the document is hardly conclusive and much importance cannot be attached to the nomenclature alone since it is the real, intention which requires to be gathered. It is from this angle we propose to analyse the document. No doubt the document is styled as a deed of conditional sale, but as we have just now observed, that is not conclusive of the matter.”
14.5 In the case of Bishwanath Prasad Singh v. Rajendra Prasad" = reported in AIR 2006 SUPREME COURT 2965 = 2006(4) SCC 434, Hon'ble the Supreme Court has held and observed as under in para 16, 26, 27 and 33:
16. A deed as is well known must be construed, having regard to the language used therein. We have noticed hereinbefore that by reason of the said deed of sale, the right, title and interest of the respondents herein was conveyed absolutely in favour of the appellant. The sale deed does not recite any other transaction of advance of any sum by the appellant to the respondents was entered into by and between the parties. In fact, the recitals made in the sale deed categorically show that the respondents expressed their intention to convey the property to the appellant herein as they had incurred debts by taking loans from various other creditors.
26. Section 58 (c) of the Transfer of Property Act, 1882 defines mortgage by conditional sale in the following terms:
"(c) Mortgage by conditional sale.-- Where, the mortgagor ostensibly sells the mortgaged property--
on condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller:
the transaction is called mortgage by conditional sale and the mortgagee a mortgagee by conditional sale :
Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale."
27. A bare perusal of the said provision clearly shows that a mortgage by conditional sale must be evidenced by one document whereas a sale with a condition of re- transfer may be evidenced by more than one document. A sale with a condition of retransfer, is not mortgage. It is not a partial transfer. By reason of such a transfer all rights have been transferred reserving only a personal right to the purchaser, and such a personal right would be lost, unless the same is exercised within the stipulated time.
33. In the instant case, as noticed hereinbefore, the transfer is complete and not partial, no stipulation has been made that the appellant cannot transfer the property. Not only that the appellant was put in possession of the land, his name was also mutated.
14.6 In the case of Vishwanath Dadoba Karale v. Parisa Shantappa Upadhye reported in AIR 2008 SUPREME COURT 2510 = 2008(11) SCC 404, Hon'ble the Supreme Court has held and observed as under in para 7,8,10 and 16:
“7. An answer to the question as to whether the transaction is a sale or a mortgage not only would depend upon the language used in the deed, but also the circumstances attending thereto. The plaintiff in his deposition categorically stated that his father had taken by way of a loan a sum of Rs. 500/- from the appellants. There are also evidences on record to show that the market price of the land was higher than Rs. 500/- at the relevant point of time.
8. When an absolute transfer of property is made, it cannot be limited to a period. The transaction shows that the appellant was to have title in the property for a period of five years. Appellant was to remain in possession thereof only for the said period. Plaintiff/respondent was entitled to tender the said amount of Rs. 500/- not only at the expiry of the said period but even prior thereto. On tender of such document, the appellant was required to execute a deed of reconveyance in favour of the plaintiff/respondent. Such a transaction, in our opinion cannot be construed to be a transaction of sale. It was a mortgage as has rightly been held by the High Court. A suit for redemption of mortgage, therefore was maintainable. A suit for redemption is essentially a suit for recovery of possession.
10. In this case, the terms of the sale and condition of repurchase were recorded in one document.
16. Having regard to the terms of transaction, we are of the opinion that the High Court was correct in its opinion that the transaction evidenced a mortgage and not a sale.”
15. In light of the above, what is relevant is the terms of the deed containing the transaction in question and in the case of any ambiguity, the attendant circumstances. If the terms and language of the deed are not ambiguous and are clear to construe the intention of the parties so as to make out whether a deed could be said to be a deed of mortgage or sale, no other evidence or circumstance would be required to be considered.
15.1 Relevant terms of the deed Exh. 23 are therefore required to be considered which are translated as under:
“Thus, property of this description is of our ownership and possession. The possession of the same is given to you today by this deed of conditional sale by taking Rs.10,000.00 from you. You may keep possession of thereof, pay Government revenues, cultivate or get it cultivated and enjoy crop thereof or utilize the same as per your own wish. Said land was in our personal cultivation and actual possession thereof has been handed over to you. In this deed, condition is that the said amount of Rs.10,000.00 when we pay back to you within five years from today, you shall give back the said property to us with possession. And in the same manner, we shall have no right to ask back the same after expiry of the time limit. With such condition, we execute this deed of conditional sale.”
The question whether a particular deed can be construed to be transaction of mortgage with conditional sale would be required to be considered only when condition to re-transfer is provided in the same document but by incorporation of such condition, whether the intention of the parties to take such transaction as ostensible sale or mortgage could be gathered only from the language of the deed. Therefore, as held by the Hon'ble Supreme Court in the case of Tamboli Ramanlal Motilal (supra), one should be guided by the terms of the document alone without much help from the case law and it is further observed that of course, the cases could be referred for the purpose of interpreting particular clause to gather the intention and that it is also settled law that the nomenclature of the document is hardly conclusive and it is always the intention of the parties which requires to be gathered from the document. Similarly, in the case of Bishwanath Prasad Singh (supra), in the context of section 58(c) of the Transfer of Property Act, the Hon'ble Supreme Court held that a mortgage by conditional sale must be evidenced by one document whereas sale with condition to re-transfer could be evidenced by more than one document. A sale with condition of re-transfer is not mortgage. It is not partial transfer. By reason of such transfer, all rights have been transferred reserving only a personal right to the purchaser and such personal right would be lost unless the same is exercised within the time stipulated.
16. In the case on hand, the condition in this very deed provides for transfer of the suit property to the executants of document by the persons in whose favour the deed was executed. In fact, there is no term in the deed providing for sale becoming absolute on default of payment or the sale becoming void on payment being made. What is clearly provided in the deed is that if the payment referred to in the deed is made by the appellants-executants of the deed, the respondents no.1 and 2 shall transfer the property to the appellants. Therefore, though the deed is given nomenclature of conditional sale, but the intention of the parties as could be gathered from the language of the deed cannot be taken to be in any manner to make the transaction as sale with condition to repurchase. The transaction between the parties by the deed Exh. 23 was a transaction of mortgage with a condition to give back the property to the appellants if the appellants make payment within the period of five years. In my view, the transaction was purely with condition to transfer the property back to the appellants if the payment was made by the appellants within the period of five years. There is no further term providing that in case such payment is not made, the transaction would become a sale. Still, for all purposes, the transaction in Exh. 23 could be taken as a mortgage by conditional sale,and not sale with condition to repurchase. I, therefore, hold that the transaction in deed at Exh. 23 is a transaction of mortgage with conditional sale.
16.1 In view of the above interpretation of the terms at Exh. 23, the judgment in the case of Kantilal M. Kadia (supra) relied on by the learned advocate Mr.Vakil would not be of any help to the respondents. In the said judgment, this court while considering the views expressed by Hon'ble the Supreme Court in various judgments right from 1954, has ultimately summarized as to what transaction could be termed as mortgage with conditional sale or sale with condition to repurchase. It is held by this Court relying on various judgments of Hon'ble the Supreme Court that if the terms of the deed are not clear or if there is ambiguity in the terms of the deed, the attending circumstances could be looked into but if the terms themselves are clear to find out whether particular deed is deed of mortgage with conditional sale or a sale with condition to repurchase, the deed should be construed by relying upon the terms in the deed and for such purpose, evidence of the surrounding circumstances cannot be considered.
17. When transaction in question is held to be a transaction of mortgage with conditional sale, next question would be whether what is further provided in this very deed could take away the right of the appellants to redeem the mortgage or it would amount to clog on equity to redeem the mortgage. The deed at Exh. 23 further provids that on expiry of five years, the appellants shall have no right to ask for handing over back the suit property. At this stage, one more document Exh. 37 needs to be considered and the question would be as to whether by such subsequent document at Exh. 37, the appellants original owners relinquished their right to redeem the mortgage or whether by such document, right of the appellants to redeem mortgage would stand extinguished?
17.1 As regards the condition in the deed itself providing for not claiming the suit property after a period of five years, it is required to be noted that the right of redemption is a statutory right and such provision in the document of mortgage itself would amount to a clog on the equity of redemption of mortgage. Such term in the mortgage deed itself can be said to be void because the very deed which is for the transaction for mortgage cannot provide for taking away the right of mortgagor to redeem the mortgage, and cannot be enforced against the mortgagor.
17.2 Hon'ble the Supreme Court in the case of Shivdev Singh and another versus Sucha Singh and another, reported in 2000(4) SCC page 326, has held that the right of redemption cannot be taken away by the same document and if any provision is made in the same document taking away the right of redemption or to prevent the mortgagor to redeem the mortgage, such provision in the deed is void.
18. Then the question would be whether by virtue of subsequent document Exh. 37, right of the appellants to redeem the mortgage was extinguished or not. The document Exh. 37 provides that the appellants having accepted further Rs.1500.00, have given up their right to take back the suit property. Such a covenants or terms in Exh. 37 were read by learned advocate Mr. R.R.Vakil as making conditional sale absolute. As per his submission, the first deed Exh.
23 was conditional sale and by second document Exh. 37, if before expiry of five years, the appellants had given up their rights on acceptance of Rs.1500.00 more for not getting back the suit property and if they have shown readiness and willingness to cooperate with the appellants, where their presence is necessary in any Government office for transferring the property in their name, this would be nothing but making conditional sale to be an absolute one even before expiry of five years.
19. On the other hand, learned advocate appearing for the appellants submitted that such document Exh.
37 is nothing but a clog on redemption and right of redemption cannot be taken away by such agreement because the right of redemption is statutory right and by simple agreement of the mortgagor without there being registered document, valuable right to reconvey the property as contemplated under section 60 of the Transfer of Properties Act, cannot be said to have been extinguished.
20. This issue about the extinguishment of right of redemption by an act of the party is interpreted and explained by Hon'ble the Supreme Court in the case of Narandas Karsondas versus S.A. Kamtam and another, (1977) 3 SCC 247. In this judgment, Hon'ble Supreme Court has held as under in para 30, 31,33, 34 and 35:
“30. The principal question in this appeal is whether the right to redemption has been extinguished by any act of the parties. The English decisions are based on the provisions of the Law of Property Act, 1925. In England sale is effected by the contract of sale, and in India an agreement for sale is not a sale or transfer of interest. In England, a mortgagee gets an equitable interest in the property. Under the English doctrine a contract of sale transfers an equitable estate to the purchaser. The Court does not assist the mortgagor by granting him a remedy unless there is collusion on the part of the mortgagee. In India there is no equity or right in property created in favour of the purchaser by the contract between the mortgagee and the proposed purchaser.
31. In India, there is no distinction between legal and equitable estates. The law of India knows nothing of that distinction between legal and equitable property in the sense in which it was understood when equity was administered by the Court of Chancery in England. Under the Indian law, there can be but one owner that is, the legal owner. See Rani Chhatra Kumari v. Mohan Bikram Shah [(1931) 58 IA 279:AIR 1931 PC 196]
33. In India, the word "transfer" is defined with reference to the word "convey". The word "transfer" in English law in its narrower and more usual sense refers to the transfer of an estate in land. Section 205 of the Law of Property Act in England defines: "Conveyance" includes a mortgage, charge, lease, assent, vesting declaration, vesting instrument. The word "conveys" in section 5 of the transfer of Property Act is used in the wider sense of conveying ownership.
34. The right of redemption which is embodied in section 60 of the Transfer of Property Act is available to the Mortgagor unless it has been extinguished by the Act of parties. The combined effect of section 54 of the Transfer of Property Act and section 17 of the Indian Registration Act is that a contract for sale in respect of immovable property of the value of more than one hundred rupees without registration cannot extinguish the equity of redemption. In India it is only on execution of the conveyance and registration of transfer of the mortgagor's interest by registered instrument that the mortgagor's right of redemption will be extinguished. The conferment of power to sell without intervention of the Court in a Mortgage Deed by itself will not deprive the mortgagor of his right to redemption. The extinction of the right of redemption has to be subsequent to the deed conferring such power. The right of redemption is not extinguished at the expiry of the period. The equity of redemption is not extinguished by mere contract for sale.
35. The mortgagor's right to redeem will survive until there has been completion of sale by the mortagee by a registered deed. In England a sale of property takes place by agreement but it is not so in our country. The power to sell shall not be exercised unless and until notice in writing requiring payment of the principal money has been served onthe mortgagor. Further section 69(3) of the Transfer of Property Act shows that when a sale has been made in professed exercise of such a power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale. Therefore, until the sale is complete by registration the mortgagor does not lose right of redemption.”
21. In the case on hand, it is an undisputed fact that the document Exh. 37 is not a registered document. In fact, when there is no independent registered agreement between the parties for transferring right, title and interest in favour of mortgagee, simple agreement between the parties whereby the mortgagor agreed to forgo his right to take back the property could not be taken as extinguishment of right of mortgagor to redeem the mortgage. Not only this but such agreement reflecting act of mortgagor not to take back the property in future on acceptance of further amount of Rs.1500.00 could as well be termed as clog on equity to redeem the mortgage. I am, therefore, of the view that irrespective of of the term provided in the mortgage deed itself as well as irrespective of the execution of document at Exh. 37, the right of the appellants to redeem the mortgage would still survive and neither by term in the original mortgage deed nor by subsequent execution of agreement Exh. 37, the rights of the appellants to redeem the mortgaged property have been extinguished.
22. In view of the above, Judgment and decree of both the Courts below are required to be quashed and set aside.
23. In result, this appeal is allowed. Judgment and decree passed by the Courts below are hereby quashed and set aside. Appellants are held entitled to redeem the suit property on payment of the amount of Rs.10,000.00 (Rupees ten thousand only) referred to in the deed Exh. 23 within six months from today failing which the appellants will have no right to claim redemption of mortgaged property.
At this stage, learned Advocate Mr. R.R. Vakil appearing for respondents No.1 and 2 request to suspend the judgment and decree passed by this Court in this appeal for enabling the respondents No.1 and 2 to challenge this judgment and decree before the higher forum. Considering the fact that this second appeal is being allowed reversing judgment and decree passed by both the courts below, it would be in the interest of justice to accept the request made by the learned advocate Mr. Vakil. Hence the judgment and decree passed by this Court in this appeal shall stand suspended for a period of six weeks from today.
an vyas (C.L. Soni,J.)